To ask for help with buying first home?

[sundaybluecoffee]

So my partner and I are currently renting a 1 bed flat (£500pm) in SE England. Would love to stay in the area/15 mile radius.

We've been talking about potentially looking into a mortgage and buying options but honestly I'm a little clueless as to how it all works!

We've seen some help to buy properties where you need a 5% deposit, are these a good option? They look nice & good prices too (less than £200k).

My partners income is £2-3k a month (varies as he's self employed but almost always at least 2k a month) & I am currently looking for full time work.

We have no children (but would like one in the future!) and are not married.

Is it cheaper to try and buy and get a mortgage over continuing to rent? How much would the mortgage be each month would you say on a £160-190k property? And how much in terms of deposits needs to be saved?

Thank you so much!

Help!

You’re looking at around £800-£900 per month mortgage on a property of the price range you’ve quoted. This would be with a 100% mortgage though, which are very rare.

A 10% deposit on £160,000 would be £16,000, and would reduce your monthly payments to under £750 per month.

It’s roughly £500 per month for a mortgage of £100,000, and £1,000 per month on £200,000.

@Argeles ah okay, £800pm on a mortgage is too much for us at the moment, I think £650 max.

Maybe we aren't ready yet, of course we still have to save a deposit too! For some reason I thought it would be easier than this.😅🤦🏼‍♀️

Plus you would need money for; solicitor fees, land registry fees, mortgage arrangement fees, moving costs, house survey, emergency savings, post redirection etc

In my experience if you can get a mortgage, it's always cheaper than renting. For context, my mortgage payment is £600 and we over pay £50 too. My neighbours house is rented, and they now pay just over £1k a month!

Your partner sounds like he has a good income, and if you manage to get a full time job earning even £1k a month you'll be in a really good position.

Deposit wise, the more you have the better, so I would concentrate on building that up as much as possible first. Perhaps about £25k depending on the value of the house you want.

No experience of help to buy so I can't help on that front.

The greater the value of the deposit, the greater the reduction in the monthly repayments.

Be careful though, and check how much on average property prices have been increasing and are likely to increase in the next few years in your area. You do not want to start saving and then get priced out due to property increasing in value. My DH and I became stuck in that cycle when trying to buy in London 5 years ago. We knew how much we needed to save, would save it, then by that point the values had increased and so it took a few years longer and earning more money to save a greater amount so we could catch up!

@St0rmoftheweek4 oh crap, I am severely uninformed! This all sounds like a lot of work and money.

@MagicKingdomDizzy Thanks! That's a little more encouraging. Yeah if I do get a job that'll be an extra £1k income.

We're finding it so hard to find somewhere suitable to rent here as we would like some more space and a garden for the dog, nowhere takes dogs so we're thinking about the buying route.

My DP finishes paying off a huge loan end of June so we should have some extra money then to rent somewhere nicer, or as you said, save for a deposit

@Argeles oooh okay, thanks for that tip! I can imagine London is very expensive!

Typically you would pay X amount back per month for 25 years, plus the interest on the money that you borrowed.
Some mortgages allow you to over pay, so that your mortgage would be less than 25 years
Plus bills on top

You can only borrow 4.5 times your annual income - so if your DP is earning £30k (and can prove it with his audited accounts for the last three years) he will be able to borrow up to £135k.

When you are working, £800 would be affordable, if you would want to outlay that amount each month of course.

If you are able to save now, any money saved will assist with Solicitor fees etc.

As soon as you enter into full time employment, perhaps you could begin to save as much as possible to put towards a deposit. When I return to work, my DH and I have agreed that I’ll save 100% of my earnings and continue to live off of his, so that we can put it all towards a deposit on our next home, as otherwise we’ll never be able to afford to do so. We anticipate it’d take us about 1-1.5 years (added to the value from the sale of our current flat). Most mortgage lenders won’t give you a mortgage until at least 6 months of work for one employer anyway, so you couldn’t obtain one in that time, so you may as well use that time as wisely as possible.

London is completely nuts!

I assume you’re not in London given your rent.

So, save up as much as you can, quick as you can. Looks like prices on se are not really increasing.

Then, when ready start looking at properties and go get a mortgage. I’m under the impression that it’s a tad more complicated getting a mortgage if self employed. Perhaps more checks.

I was overwhelmed at the thought of a mortgage but once you start it all becomes apparent and is doable. Ensure you keep records of bank statements and utilities.

www.moneysupermarket.com/mortgages/results/#?goal=1&types=1&types=2&types=3&types=4&types=5&borrow=190000&property=200000&page=1

Try this

Bear in mind that if you are young enough you can go for a 30 or 40 year mortgage.

PROS of owning
Once mortgage is paid, you only have bills to pay, but possibly some house maintenance
Your children may inherit your property, if it is not used to pay for care fees
Freedom to decorate, have pets, extend etc

RENTING
More flexibility to move location
The need to pay rent forever + bills
No responsibility for maintenance or repairs
You may need to move if landlord sells
More restrictions about what you can do with property eg decorate, pets

Look into help to buy further. We bought our first house with HTB in south east (3 bed terrace) for £250k. 12.5k deposit, 50k from government, mortgage for remainder. Cost £900 a month for the mortgage repayments.

We sold 5 years later with £80k in equity so it worked out really well for us. Look into new builds in your area. I know it's not for everyone but it can work well.

Bear in mind when self employed banks typically need a lot more evidence regarding your income so make sure your partner has good accounts for the last 5 years neatly organised to be able to take into any bank or mortgage broker.

Our house was £185,000. We put down a 5% deposit which wasn’t hard to get. We hired a mortgage broker to organise this to us, although admittedly we probably could have done this ourselves - I just felt like it was a bit of jungle out there and I wanted to make sure we got a mortgage firstly, and we got a mortgage with decent rates considering our deposits was small.

We went with santander in the end, and we got £500 cash back on completion.

Our repayments are £762 a month and it is a 35 year term.

I mean the 95% mortgage wasn’t hard to get, not the 5% deposit by the way!

You can usually only borrow 5x combined income as a couple or 3x higher income. So you need to earn 32k between you to borrow 160k, or 38k between you to borrow 190k. You'll need to be past the probation period in an employed job and he'll need to prove his self employed income is reliable.

Has he got three years of accounts that average £2k a month?

That seemed to be what delayed buying for a lot of my self-employed friends - either not enough years of accounts yet, or the earlier accounts not having the same consistent income level.

Op have you considered shared ownership?